A Treasury commissioned report has called for UK offshore financial centres to raise supervision standards and cut back on the protection offered to foreign savers.   

Michael Foot, author of Final report of the independent review of British offshore financial centres, said the Isle of Man should consider closing its depositors’ compensation scheme to foreign savers following the collapse of Kaupthing Singer & Friedlander IoM. . .

‘Reduction or elimination of these [foreign savers] might allow jurisdiction to provide protection to local residents without the need for a liability cap. This is something that they have the freedom to think about.’ . .

The collapse of Icelandic banks Kaupthing and Landsbanki in October 2008 caused problems for savers who deposited money in its subsidiaries based in the IoM and Guernsey.

The IoM government has paid out £85 million so far to savers who deposited cash with Kaupthing Singer & Friedlander IoM through its compensation scheme while consumers who saved with Landsbanki Guernsey have received no support from the Channel Island Crown Dependency. 29-Oct-09.

http://www.citywire.co.uk/personal/-/news/money-property-and-tax/content.aspx?ID=365088&Page=2